Income Tax

Jim Cunningham Excerpts

Wednesday 5th November 2014 Commons Chamber

[Chris Leslie]

It sounds as though the right hon. Gentleman is trying to wriggle out of voting for that cut in the 50p rate. He tries to change the subject—“Look over here, we’ve done this” or “We’ve done that,” but he voted for a cut in the 50p rate for the very wealthiest in society. He asks—I am sure we will hear this from the Minister as well—why we did not do that for 13 years. We had a global financial crisis that hit tax receipts significantly, and in 2009, looking at the state of the public finances, we felt that the fairest thing to do was to raise the rate to 50p, which is obviously shocking to Government Members.

[Mr Jim Cunningham (Coventry South) (Lab)]

The financial crisis actually started in America with JP Morgan. The Government are trying to rewrite history. Is it not true that under this Government people are worse off to the tune of £1,600 a year, and that the purchasing power of their wages has dropped 6%?

[Chris Leslie]

People faced a double whammy—the tax and the changes to their tax credits by the Conservatives, together with that squeeze on living standards as a result of wages failing to keep pace with prices.

We are doing the Government a favour today. We are trying our best to persuade them of the error of their ways. We have tabled a motion that allows them to put right the wrong they have done, get their priorities right and admit it was a mistake to reduce the top rate of income tax at a time when working people are not feeling any recovery.

Oral Answers to Questions

Jim Cunningham Excerpts

Tuesday 2nd September 2014 Commons Chamber

[Mr Osborne]

The autumn statement will be an opportunity to set out further improvements to infrastructure in the south-west, and the services, roads and railways that support Plymouth. My hon. Friend has been a doughty champion for that city and delivered huge investment to it, which was never forthcoming before. I assure him that we are looking at specific transport improvements to connect better the whole of the south-west with the rest of the United Kingdom.

[Mr Jim Cunningham (Coventry South) (Lab)]

Many local authorities are struggling to implement the Government’s policy on free school meals—for example, Coventry has to find something like an additional £1 million. What are the Government going to do about that?

[Danny Alexander]

The Government have made available funding to pay for the implementation of free school meals for infants and to enable additional capital investment in kitchens and the like in schools. The reports from around the country are that implementation is going successfully and that this policy will benefit thousands of children and their families.

Finance Bill

Jim Cunningham Excerpts

Wednesday 2nd July 2014 Commons Chamber

[Chris Leslie]

The hon. Gentleman represents very many of those investment fund managers. He is doing the job he was sent to do, but this is a matter of priorities, and I have to say that the Opposition just disagree. The Treasury has finite resources at its disposal, and at a time of pressures, cuts, and rises in tax—through VAT and in other ways—that hit the least well-off in society, I just disagree with Ministers and Members on the Government Benches that this should have been the priority.

There were other specific areas where we tried to persuade the Government to improve the Bill, such as the proposal to give shares to employees in exchange for employment rights. We believe that undermines what should be a healthy approach to employee share ownership, because it gives the sense that something is being taken away, and that there is a disadvantage. That point was voiced not just by Opposition Members, but by some Government Members. Again, however, we could not persuade the Government on that.

So many tax loopholes need to be addressed, and the Finance Bill should have been the opportunity to tackle some of them, not least the notorious quoted eurobond exemption, which is costing taxpayers hundreds of millions of pounds. Ministers ought to have had the courage to take on that issue. Some of the Bill’s proposals for pensions flexibility are sensible, but big questions remain about the advice we will be able to give retirees to make sure that they get the guidance they need, at that most crucial point in their financial lives, to make the right choice, if they are not purchasing an annuity. Ministers have not lived up to the challenge of ensuring that that guidance and advice is possible. In the debate, I heard that that guidance may currently equate to 15 minutes of face-to-face advice—perhaps I should say face-to-faces advice, because the Minister with responsibility for pensions is now saying, “We will give you some guidance, but it might be as part of a group of people.” The Government have to improve the legislation in this area.

The Bill contains a proposal for a married couples allowance. The Chief Secretary to the Treasury and, I suspect, the Chancellor personally disagree with it, but in a coalition they have to throw a bit of meat to the Back Benchers. The allowance discriminates between forms of partnership and does not help many married couples at all, as we see when we look at the total number who will benefit. If we have tax cuts to give, they should be given to as many people as possible.

Of course, we also tried to improve the specifics and dissuade the Government from continuing their tax cut for millionaires—the reduction from 50p to 45p in tax on earnings of more than £150,000. Again, that is a sign of their priorities: they stand up for those who already have significant wealth in society, but do not respond to the needs and requirements of the least well-off.

We tried our best to improve the Bill, but it missed a number of opportunities. Significant reforms should have been in it, but are conspicuous by their absence. Why did the Treasury not put the cost of living concerns front and centre in this legislation? I am not just talking about making sure that energy companies stop ripping off households up and down the country, or about passing on wholesale price reductions to ordinary households; the Bill should have contained, for example, steps towards a 10p starting rate of tax. There are a number of ways in which cost of living issues should have been far higher up in this legislation.

[Mr Jim Cunningham (Coventry South) (Lab)]

The Conservative Government of the early 1970s recognised that there was a cost of living problem in this country, and they gave a cost of living payment, through the wage packet, to the low-paid in industries.

[Chris Leslie]

One would have thought that by now Ministers would have twigged that for all the talk of growth and the recovery, their constituents, never mind ours, are not seeing the benefits in their daily lives. That should have been a focus in the Finance Bill. It should have focused more on housing, as we have a crisis in this country, whereby demand exceeds supply and we have the lowest level of house building since the 1920s. Yet Ministers seem intent on structuring a lopsided recovery in our housing market, failing to deliver the 200,000 properties a year we should be aiming towards by 2020. In addition, many tenants are being ripped off by lettings agencies in our private rented sector. We need reforms to deal with those sorts of things and the Budget ducked those issues, as did the Finance Bill.

The Bill could have dealt with some of the exploitative zero-hours contracts. It should have contained measures to help small and medium-sized enterprises with business rates, because many firms in our constituencies are finding it difficult to get by. We should make sure that we help them, not just with business rates but by making sure that the banks do their job and provide credit. Those are the sorts of reforms that would make a big difference, but again, they were not in this Finance Bill.

--- Later in debate ---

[Chris Leslie]

Let the record show that the Conservative Minister did not rule out increasing VAT to above 20%. It is telling that he gave a heavy hint that that remains open as an option. We can have these discussions and examine these particular issues, but I am looking at the missed opportunities—the things that should have been in the Finance Bill. We are now on its Third Reading, and it is time that Ministers realised that people from across the country are crying out for significant changes and improvements that will affect their lives.

I am thinking, for example, of the 5 million people in low pay and the incentives to deliver a living wage. That could have been part of the Finance Bill, but it is not. I am thinking of those families who are struggling with the high cost of child care, which is increasing at a rate higher than inflation. If only the Minister had designed his bank levy properly in the first place and collected the £2.5 billion that he promised the country, we could afford to move from 15 hours of free child care for working parents of three and four-year-olds to 25 hours. That is the sort of reform that could make a big and appreciable difference to the lives of working people up and down the country.

[Mr Jim Cunningham]

Once again, it comes back to helping families with the cost of living. The Government cut Sure Start, nursery places and so on. Although they boast that they expanded that provision, they did not—they cut it, although we do not have the exact figures. The situation is exacerbated for a lot of families by the bedroom tax, which is forcing people into more expensive accommodation and thereby driving rents up. There is also a lack of social house building in this country.

[Chris Leslie]

That is my point. The Press Gallery is not bursting at the seams because the Government do not want people to think about what could have been in the Finance Bill. That is not something they want to talk about. They want it to be a “steady as she goes” Finance Bill. They do not want to address the problems of the bedroom tax or to supply real help to the long-term unemployed through starter jobs to give them the opportunity to repair their CVs and get a foot on the ladder. Repeating the bankers bonus tax would have supplied the revenue for that. There are funded ways of doing those things; despite how Ministers seem to want to portray it, this is not about unfunded commitments or borrowing. There are clear, practical and well-costed ways of delivering real improvements to people’s lives, but Ministers refused to do them.

Why are Ministers missing the opportunity offered by this Bill? As far as they are concerned, everything is fine with the economy. It is all going perfectly well. That is their view, but I am afraid that we disagree on that point. As far as Ministers are concerned everything is fine with living standards, but the OBR has said that people will be worse off in real wage terms in 2015 than they were in 2010. Ministers think that everything is fine in the welfare system, but they do not realise that the welfare bill is rising because they are not tackling the root causes of welfare inflation, such as rising rents, long-term unemployment and the subsidies required for low wages. Those are the sorts of challenges that should have been covered in the Finance Bill but are not.

On the deficit and the national debt, Ministers think that everything is fine even though the past couple of months have seen the deficit rise. It is going in the wrong direction. They have added a third to the national debt, which is now at £1.2 trillion. If interest rates go up even by 25 basis points—0.25%—an extra £2 billion of public expenditure will be required to service the debt that they will be accumulating.

Ministers think that everything is fine with productivity, yet infrastructure output is down by 10% compared with in 2010. They think that everything is fine in the housing market, yet we can see by the lopsided nature of what is happening in the economy that there are real risks that mortgage rates might well rise prematurely because of how they have failed to recognise the need to match demand and supply more effectively. They might be satisfied with the state of the economy, but we are not.

[Mr Cunningham]

It is interesting that my hon. Friend has mentioned interest rates, because, one way or another, they are bound to go up over the next 12 to 18 months. That will have a major effect on negative equity for people who have bought their houses, but, more importantly, it can affect small businesses that want to borrow money and are not getting much help from the banks at the moment. The Government spend half their time blaming a Labour Government for the mess that the banks created. They have never attacked the bankers, who made the economic situation worse, not better. They are apologising for the bankers and blaming us.

[Chris Leslie]

Government Members and Ministers do not understand how important it is that we ensure that the recovery is sustained and sustainable. A premature rise in interest rates has considerable risks. Three quarters of credit and debt is floating, so if interest rates do rise prematurely, significant harm will come to many householders. Even a quarter point rise in interest rates will cost the typical householder £240 per year. [Interruption.] The hon. Member for Suffolk Coastal (Dr Coffey) may be relaxed, as the Chancellor is relaxed, about interest rates. The Chancellor says that he is not bothered—that he is relaxed about rising interest rates. Is the hon. Lady relaxed about rising interest rates? I will give way to her if she is.

The Economy and Living Standards

Jim Cunningham Excerpts

Thursday 12th June 2014 Commons Chamber

[Mr Jim Cunningham (Coventry South) (Lab)]

Picking up on the last point that the hon. Member for Redcar (Ian Swales) made about the 10p rate, let me add that a Labour Government introduced that in the first place. We can have lots of debates about that after the event, but obviously I do not have a lot of time to go through the issues I would want to go through.

I welcome the fall in unemployment—it would be a bit churlish of me not to do so. Obviously, I also welcome the Modern Slavery Bill, because in a modern day and age human trafficking is an abomination to civilised society. Of course I also welcome any help that small businesses get, although I do not think that what is being done is enough. Having said all that, the Queen’s Speech falls down because nothing is being done to construct social housing. By contrast, if Labour wins the next general election, we will probably build about 200,000 houses a year, because that is what is needed. Government Members have been debating what we did and did not do when we were in office, but let us not forget that we had to clear up an 18-year mess left by the Tories—they tend to forget that. I can remember the falling down hospitals, the closure of schools and so on, so we do not need any lessons from those guys over there on the Government Benches. Of course in 13 years we could not do everything.

One thing we should draw to the House’s attention is that purchasing power, regardless of what job someone is in, has fallen by between 5% and 6%. Schoolteachers and low-paid people in Coventry have seen a gradual erosion of the purchasing power of their wages. When people talk about the European Union and Europe, it is well worth mentioning—it has been mentioned before—that a Labour Government gave the British people a referendum on Europe for the first time. The Heath Government signed up to Europe but the Labour Government of the time went ahead and gave that referendum. Also on Europe people must remember that we had the five tests.

Obviously, I cannot speak about other issues for as long as I would wish, but I want to mention legislative changes on the regulation of taxis, which are certainly creating a lot of issues in Coventry, and up and down the country, with demonstrations yesterday. The other issue I want to raise is the situation at Coventry City football club. We were promised a Bill last year that would regulate the Football League, but that has continually stalled. A private Member’s Bill will be reintroduced to do something about that, but people in Coventry want to know why they have to spend £70 every time they want to see their football team because of the shenanigans going on between the football club and all the other parties involved. Nothing has been done to resolve that problem. May I suggest that the relevant Select Committee tries to resolve it by taking evidence? I am sorry I cannot go on any longer, as I would love to have raised a load of issues.

Oral Answers to Questions

Jim Cunningham Excerpts

Tuesday 29th April 2014 Commons Chamber

[Nicky Morgan]

I thank my hon. Friend for that question. I understand that he established in his constituency the annual festival of manufacturing and engineering, and that the next event will be held in November 2014. As he said, this morning’s GDP figures show the strongest annual performance for manufacturing for three years—up 3.4%. He asked what more the Government can do. In the Budget last month we announced plans to double UK Export Finance’s direct lending programme and further to increase our support for apprenticeships.

[Mr Jim Cunningham (Coventry South) (Lab)]

Has the Chancellor, in his long-term plans for the economy, looked at the impact of any increase in interest rates on businesses, and in particular on manufacturing?

[Nicky Morgan]

First, it is welcome to hear Opposition Members talking about this Government’s long-term economic plan. Long may they continue to do so, but I am not going to take lessons on manufacturing from them. Manufacturing halved as a share of the economy under the previous Labour Government. This Government are on the side of manufacturers and small businesses up and down the country.

Income Distribution and Taxation

Jim Cunningham Excerpts

Wednesday 9th April 2014 Westminster Hall

[Mr Harper]

I cannot answer the right hon. Gentleman’s detailed question, because I have not studied the matter, but the other thing that he needs to do—I am not sure whether he has incorporated this into his judgment—is look at the interaction of the tax changes that we have made with the benefit system. Over this Parliament, there will be a significant increase in the personal allowance from what it was in 2010-11 when we came to power, and what it will be when this Parliament finishes, from something in the order of £6,000 or £6,500 to £10,500. A lot of people on lower incomes, such as those on the minimum wage, are moved out of the taxation system altogether. Previously, people could be on a relatively modest income and paying tax, but at the same time getting various income-related benefits.

I think that I have set that out carefully, but if I have not, the Minister will do so in her response. Otherwise, because the debate is not about universal credit and she might not have all those facts at her fingertips, I am sure she is happy to write and to set it out in detail later. I am, however, grateful for the point made by the right hon. Gentleman.

[Mr Jim Cunningham (Coventry South) (Lab)]

I will be quick, as the hon. Gentleman does not have much time. I thank him for giving way, but when the present Government came to power basically someone did not start paying tax until just over £6,000. I do not have the exact figures with me, but if we take into account, for example, 6% inflation over the past four years, the value of the £10,000 threshold that has been introduced drops by £1,200. In other words, had the £6,000 been pushed up for inflation over the past four years, we might arrive at a different value for the benefits to be got out of £10,000 before paying tax.

[Mr Harper]

The hon. Gentleman makes half a sensible point. He is right that the personal allowance would have gone up because of indexation in line with inflation—the statutory provision, unless the Chancellor decides not, in which case he has to set out why—but by only a relatively modest amount. The difference between what it would have gone up to had we simply indexed it and the great increase to £10,500 next year is a significant policy change and has made a real difference to people on lower incomes, many of whom will have been taken out of tax completely.

Finally, to look at the impact in my own constituency, under the tax changes this April a further 381 people are taken out of tax altogether, but 37,223 people benefit from the rise in the personal allowance. If we take the figures for the whole of the Parliament, 4,334 of my constituents will have been taken out of paying income tax entirely by the significant changes in the personal allowance. That significant benefit incentivises people, particularly at the lower end of the income spectrum, to work, and it is why there are several thousand more people in my constituency in work now than there were in 2010, when this Government were elected.

In the environment we are in, where we have a limited amount of money and we cannot cut taxes for everybody, we should focus our help on those who are lower paid and who are genuinely on middle incomes, which, as I said, are incomes of about £20,000, and not numbers beginning with threes or fours. In my constituency, I can see that that is where the benefit should be focused. It should be a priority both for this Government and for our party to make sure that we are delivering benefit to as many people as possible. I am pleased to say that the message I took from the Budget, after listening to the Chancellor’s speech very carefully, was that that was where he has aimed our tax changes.

I agree with the right hon. Member for Oxford East (Mr Smith) about the focus. The welfare changes that we are making, with the benefit cap and the changes to universal credit, which I think, overall, have increased the incentives for people to work, are the right messages. The very simple one is that work should always pay and that we are trying to use our changes to the tax system to benefit the many hard-working families who are trying to do the right thing, but who are finding things difficult—although with the improving economic news, they will see rises in their incomes above the rate of inflation, therefore making them better off in real terms. Those are the people we should focus on and I am pleased that, in my judgment, that is exactly where the Chancellor aimed his Budget. That is why I was very pleased, in my short speech in the Budget debate, to commend it to the House, and why I am very pleased to support the Finance Bill.

Finance (No. 2) Bill

Jim Cunningham Excerpts

Wednesday 9th April 2014 Commons Chamber

[Cathy Jamieson]

Yes, I hear what the Minister is saying and I shall deal with some of that in a moment, because I am concerned to ensure that we get all the sums right and reach figures that everyone would agree on. Again, that is one reason we want this report brought forward, because we are now being told that the levy will generate £2.3 billion in 2013-14, £2.7 billion in 2014-15 and £2.9 billion in each of the following three years. I would give way to him again if he were able to give the details, but perhaps it would be more appropriate if he did so his response later, as it may take time to get them. We do not have the detailed figures, the evidence or the workings to show how those figures are arrived at and whether things are on course to deliver them. That is why it is important to get the report we are calling for today.

Let me say something about the problems with the levy as we see them. As I have said and as my hon. Friend the Member for Nottingham East has in previous contributions, the Government’s levy lacks ambition. The argument is that the initial levy was set at a relatively low rate, both by international standards and when measured against the scale of the taxpayer subsidies received by the sector during the financial crisis and thereafter. In discussion of the Finance Bill in May 2011, he said:

“The bank levy is a sensible idea in theory, and we broadly support it. However, the yield suggested in the Bill—only £2.6 billion—is not just small but pathetic by international standards”.—[Official Report, 3 May 2011; Vol. 527, c. 482.]

I will happily give way to the Minister if he wants to comment on the international standards, but again, perhaps he will do so when he winds up.

One other problem with the levy is that its two objectives can be seen as a bit of a paradox or even somewhat contradictory. By setting the levy as a tax on bank liabilities in excess of £20 billion and charging a lower rate for more secure long-term liabilities, the Chancellor was actively encouraging the banks to reduce their exposure by moving towards more stable forms of funding.

[Mr Jim Cunningham (Coventry South) (Lab)]

My hon. Friend has just touched on the central point about the levy: that the Government never had the will to take on the bankers in the first place, as we see if we compare what happened in this country with what happened in the United States. That is why they cannot wholeheartedly support a proper levy on the banks; it is a token levy.

[Cathy Jamieson]

My hon. Friend makes an interesting point. I suspect that if I were to stray into a long debate on what happened in the US versus what happened here, I would see—yes, I do see—Mr Bone’s eye upon me to ensure that I did not yield to that particular temptation. However, I say to my hon. Friend that that could usefully form the subject of another debate at some point, but he makes an interesting point about the will to take on the banks. I want to choose my language carefully because I want to avoid getting into that whole thing of our being seen as aggressively pursuing the banks. I recognise that there are some in the banking sector who understand how badly they got it wrong and who want to see change, but the scale of the problem has not been universally accepted, and nor has the degree of culture change that is required. The Minister has heard Opposition Members talk about that issue many times when discussing other legislation.

Returning to the initial imposition of the levy, the Chancellor also wanted to generate more than £2 billion in annual revenues. One problem was that, as was pointed out earlier, the more the banks changed their behaviour and remodelled their balance sheets, the less money the levy generated. Was the Chancellor unable or unwilling to decide whether he wanted behavioural change or a targeted revenue sum? Was it possible to do both? Some evidence suggests that it was not, because it has not brought in the amount of revenue that he intended.

Not content with devising a levy the dual aims of which are somewhat contradictory, the Chancellor also proceeded to cut corporation tax annually, arguably handing the banks a tax break. In order to ensure that the banks do not benefit from the tax break, the Chancellor has had to increase the levy every time he cut corporation tax. We have consistently raised doubts about the levy’s ability to raise sufficient funds, especially in the context of the cuts to corporation tax. During consideration on Report of the 2011 Finance Bill, my hon. Friend the Member for Nottingham East said:

“The sector will have a tax cut of £100 million in 2011-12, £200 million in 2012-13, £300 million in 2013-14, and £400 million in 2014-15. That is a £1 billion corporation tax cut over this Parliament.”

He continued:

“The Treasury ought to supplement its very modest bank levy plan with the bank bonus tax because it is only fair that those who played such a central role in the global economic downturn make a greater contribution to help to secure the economic recovery by supporting jobs and growth.”—[Official Report, 5 July 2011; Vol. 530, c. 1383.]

I would have thought that that sentiment—that those involved in making some of the decisions that caused the problems have a responsibility to do what they can to secure economic recovery and a change in culture—would be shared by everyone in all parts of the House. A combination of two factors—contradictory objectives and corporation tax cuts—means that the levy has increased on no fewer than seven occasions. It is important for me to lay this out so that the House understands the time scale for what happened with the levy, because it adds weight to our call for a report to consider that in more detail.

Back in February 2011, it was confirmed that the rate would be higher than originally proposed. That was change number one. In March 2011, at the Budget, the levy was increased to offset the effect of the 1% cut in corporation tax and by the autumn statement in November 2011—autumn was already beginning to be stretched as far as we thought possible, although of course, autumn is now in December as far as the Government are concerned—the rates were increased to ensure that tax would raise at least £2.5 billion a year. I think that was a tacit admission that the initial rate was perhaps somewhat timid. In March 2012, at the next Budget, the levy was increased again to offset the 1% cut in corporation tax.

In the next autumn statement, when the autumn had been stretched as far as possible into the first week in December, the levy was increased again to offset the 1% reduction in corporation tax. At the March 2013 Budget, the levy was increased again—guess why: to offset the 1% reduction in corporation tax. In December 2013, again at the autumn statement, in what appeared almost to be a desperate attempt to get somewhere near the £2.5 billion target, the Chancellor increased the levy again and broadened the tax base in an apparent attempt to mitigate the impact of the very behavioural change that the tax is supposed to encourage.

Finance (No.2) Bill

Jim Cunningham Excerpts

Tuesday 8th April 2014 Commons Chamber

[Kelvin Hopkins]

That is very welcome, but I do not believe in the immutability of a certain level of tax revenue and that, whatever we do, we cannot change that level because somehow the world will not produce more than 38% of GDP in tax. It is just a question of collecting that tax and enforcing the tax rates to ensure that the big international corporates, in particular, pay their taxes. When we do that, we will see a substantial increase in revenue. Of course there are countries where overall tax revenues are substantially higher than ours, and they are not necessarily countries that are doing badly economically; they are countries that are doing well, but a higher proportion of their economy is in the public sector. Those countries have higher taxes and higher public spending, and they are civilised societies, too. The countries with the lowest levels of tax and public spending are often some of the poorest, where the gulf between rich and poor is much greater and, generally speaking, life is less pleasant, particularly for the poor and the less well off.

I look forward to more enforcement and a higher tax take by enforcing the existing tax rates and ensuring that people, particularly the corporates, pay their taxes. When it comes to taxation, the behaviour of the economy is crucial.

[Mr Jim Cunningham (Coventry South) (Lab)]

My hon. Friend has said that we should look at tax avoidance. There are negotiations between the Inland Revenue and multinational companies in which the Inland Revenue estimates what it thinks the tax should be, rather than collecting the real tax.

[Kelvin Hopkins]

My hon. Friend is absolutely right. The recent head of HMRC is now a tax adviser to corporate companies, but when he worked for HMRC he seemed to have had a cosy relationship with some of the biggest corporate companies and was doing deals over lunch on what those companies should pay. That was wholly inappropriate. He should have said, “You have to pay your taxes, and we are going to chase you until you do.” That is what I want to see—HMRC staff at the highest level who view their job first as being a public servant who collects taxes for the state, the public and the ordinary citizen, rather than letting the international corporates, and indeed the domestic corporates, get away with what is effectively appalling tax fiddling. I applaud my hon. Friend the Member for Birmingham, Ladywood (Shabana Mahmood) for saying that we should have a review of the effect of tax rates from time to time.

Finance (No. 2) Bill

Jim Cunningham Excerpts

Tuesday 1st April 2014 Commons Chamber

[Bridget Phillipson (Houghton and Sunderland South) (Lab)]

I am grateful for the opportunity to speak in this debate. I want to begin by focusing my remarks on the north-east economy: the challenges that we face and why my constituents will struggle to recognise the picture presented earlier by the Chief Secretary to the Treasury as he set out the measures in the Finance Bill.

The need to secure a stronger, more balanced economic recovery is pressing. My continued concern is that, unless the Government are willing to act to address the imbalance, the north-east will continue to be left behind. The north-east economy has many strengths and is an asset for the United Kingdom. We are one of the leading export regions in the UK, and in 2011, 2012 and 2013 we were the only English region to achieve a positive balance of trade.

A large contributor to that surplus is Nissan. Its plant on Wearside is one of the world’s most productive, producing a car every 60 seconds. Nissan’s continued success and the skill and determination of the work force are sources of immense pride to us all. We have long been a region with an identity rooted in manufacturing and engineering, and with Nissan, Hitachi and many others we will show just what we can achieve. For that reason, I welcome the measures on investment allowances in the Bill. However, it is a U-turn from previous cuts to allowances and, for all his refusal to acknowledge it, the Chief Secretary must accept that it was a mistake to have made those cuts in the first place. None the less, the measures are to be welcomed.

The automotive industry continues to show great strength, providing high-skilled jobs and investment. However, it is important to acknowledge that, particularly over the past decade, growth has come about through active Government involvement, by working with Nissan and the work force there. Over the past decade Nissan has rightly enjoyed many accolades. At times, sadly, jobs were lost at the plant, but we now enjoy the largest work force there on record, which is of course to be welcomed.

[Mr Jim Cunningham (Coventry South) (Lab)]

My hon. Friend mentions the automobile industry. I am sure she would appreciate that the previous Labour Government did a lot to encourage Tata to invest in Jaguar Land Rover, which is one reason why we are starting to get great success in the manufacturing industries, including in her region.

[Bridget Phillipson]

I agree entirely with my hon. Friend’s point. I was about to come on to look at the Labour Government’s record on the automotive industry and on industrial strategy. It is simply not right to begin looking at the sector only from 2010. A lot of work went in, over a long period of time, with the work force and the trade unions as well as through Government, to make sure there were the right skills and the investment needed for the industry to compete in the future. The Labour Government took that seriously; I hope this Government will take that forward.

--- Later in debate ---

[Bridget Phillipson]

That is absolutely the case. One of the ways in which Sunderland has diversified its economy has been to move towards software. The number of new small software firm start-ups is among the highest in the UK. Many of them are looking to expand into and open offices in Europe and I have no doubt that they do not find helpful the constant discussion we are having about Britain’s role in Europe. They want to expand what they export and their role in Europe by opening offices there. They do not want to have a pointless debate about Britain’s role; they just want to get on, create jobs, invest in our region and continue to diversify our economy. I have no doubt that my hon. Friend, like me, will recognise the fact that there was a big shift in the north-east economy in the 1980s and ’90s. We have transformed our industries, although that has not been entirely of our own choosing—we had to transform them. In fact, given the transition that had to take place, we have been remarkably successful. The fact that the software sector in Sunderland continues to grow, including in Rainton Bridge in my constituency, shows what we are capable of in the north-east, but we need the Government to work with us to achieve it.

[Mr Jim Cunningham]

On the point about companies investing in this country, I am sure my hon. Friend will agree that a lot of companies, such as Nissan and Jaguar Land Rover, initially invested in this country because we are in Europe. If the Government continue to undermine that confidence, they will create some major problems in the west midlands and, as she has indicated, in the north-east.

[Bridget Phillipson]

We should not underestimate the scale of the challenge that companies such as Nissan face. It is incredibly productive and has a wonderful work force, and the Qashqai, which is produced on Wearside, was recently voted car of the year. There is so much good news in terms of Nissan and other big companies in the north-east. However, companies such as Nissan require long-term stability and the ability to make decisions about where investment will come from in the years ahead. The prospect of an in/out referendum hanging over our heads until 2017 and the constant discussion about it are simply not helpful when it comes to jobs and investment in the north-east.

The most recent unemployment figures reveal that the north-east still has the highest unemployment rate in the country, standing at 9.5%. It is clear that the recovery has yet to deliver fully for my area. The picture of youth unemployment is even more troubling. Across the three parliamentary constituencies covering Sunderland, nearly 2,500 young people aged 18 to 24 have been out of work for more than 12 months. In my constituency, that represents an increase of 1,650% in four years.

Our region has seen in the past the economic and social damage caused by long-term unemployment, destroying communities and draining hope from countless good people and their families. Ministers, however, appear to be complacent about the scale of the problem. They should act now and implement Labour’s plan for a jobs guarantee for all young people who have been out of work for more than a year, because it is clear that the Youth Contract and the Work programme are failing. This Bill is another missed opportunity to tackle the scourge of youth unemployment and long-term unemployment in constituencies such as mine.

I speak to many people in my constituency who are desperate to work and who are applying for job after job and getting nowhere. They do not even hear anything or get an interview—they make no progress. It is hard to underestimate the despair that that causes among young people who are without hope for the future and not sure where things will take them. One man who came to my constituency surgery last week told me that he faces the prospect of getting up and looking for work every day, but he has been doing it for too many years now. He is desperate to work and has a lot to offer, but it is a highly competitive jobs market in which lots of highly skilled people who have lost their jobs in the public sector are able to compete and are chasing too few jobs. The Government must address the matter urgently.

Zero-hours Contracts

Jim Cunningham Excerpts

Wednesday 19th March 2014 Westminster Hall

[Alison McGovern]

My right hon. Friend has hit the nail right on the head. There is no better word for that than “scandal”. I will come on to say a few things about the care sector. He and I are as one in thinking that we need to develop the skills of our care work force.

[Mr Jim Cunningham (Coventry South) (Lab)]

I congratulate my hon. Friend on securing the debate. It strikes me that we are going back to a 19th century approach with zero-hours contracts. Going back to the ’30s, or even before the first world war, dockers or miners would turn up at the gates of a factory or the docks, a tallyman would throw something in the middle of them, and whoever was lucky enough to pick it up got a job. Whoever did not get it did not get a job. Zero-hours contracts are a 19th century approach. I was disappointed that nothing was said in today’s Budget to address zero-hours contracts and the cost of living. People on zero-hours contracts are badly affected by the cost of living.